EIN: 954231339
UEI: WA5BZK8L1PN3
Data as of August 22, 2026
Management decision deadline — for entities that funded this organization
The FAC accepted this audit on January 16, 2026. Under 2 CFR 200.521(d), a pass-through entity that provided federal funds to this organization for this audit period must issue a management decision on these findings by July 16, 2026 (37 days ago).
What is a management decision? →Finding No. 2025-001: Financial Reporting (Material Weakness) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Reporting Statement of condition The lack of appropriate policies, procedures, and internal processes led to inaccurate recording of depreciation, total rental revenue, and amounts owed to a related party. Criteria The Organization is required to have internal controls and procedures in place in order to timely and accurately report the results of its operations, close its books, and timely file its reports with the applicable federal agencies. These procedures include levels of review, reconciling accounting records at month-end and year-end close, and maintaining accurate books and records. Cause Management did not have sufficient internal controls in place to accurately report the results of the Organization's operations during the year. Effect Insufficient controls could result in accounting errors and theft. A lack of controls over financial reporting can result in inaccurate filings with the regulatory and oversight entities. Recommendation We recommend that management re-evaluate its policies and procedures to ensure an appropriate member of management is in place to review the year-end and month-end close processes, as well as journal entries, reconciliations, and other accounting records. Management should appoint an individual to be responsible for the Organization's financial statements and reporting obligations. Identification of repeat finding The finding is a repeat of Finding No. 2024-001. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Finding No. 2025-001: Financial Reporting (Material Weakness) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Reporting Statement of condition The lack of appropriate policies, procedures, and internal processes led to inaccurate recording of depreciation, total rental revenue, and amounts owed to a related party. Criteria The Organization is required to have internal controls and procedures in place in order to timely and accurately report the results of its operations, close its books, and timely file its reports with the applicable federal agencies. These procedures include levels of review, reconciling accounting records at month-end and year-end close, and maintaining accurate books and records. Cause Management did not have sufficient internal controls in place to accurately report the results of the Organization's operations during the year. Effect Insufficient controls could result in accounting errors and theft. A lack of controls over financial reporting can result in inaccurate filings with the regulatory and oversight entities. Recommendation We recommend that management re-evaluate its policies and procedures to ensure an appropriate member of management is in place to review the year-end and month-end close processes, as well as journal entries, reconciliations, and other accounting records. Management should appoint an individual to be responsible for the Organization's financial statements and reporting obligations. Identification of repeat finding The finding is a repeat of Finding No. 2024-001. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Reporting views of responsible officials and planned corrective actions The Organization will enhance its controls and procedures to ensure financial reporting is complete, accurate, and timely.
2024-001
Finding No. 2025-002: Cash, Disbursements, and Classification (Material Weakness) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Allowable costs, Activities allowed or unallowed Statement of condition During the year ended June 30, 2025, the Organization: did not properly classify certain expenditures between expense accounts; did not properly cut off disbursements at fiscal year end, resulting in expenses not being recorded accurately within the current audit period; recorded expenses in the current audit period that apply to future periods; and did not monitor the risk ratings of the financial institutions holding the Organization's cash and restricted cash accounts to ensure they were in compliance with the minimally acceptable ratings as established by the Government National Mortgage Association ("GNMA"). Criteria Management must review invoices after fiscal year end to ensure all expenses related to the fiscal period are being accurately captured. Additionally, management should review expenditures for accurate expense account classification and proper period recording. In accordance with Chapter 2 of the HUD Handbook 4370.2, management should monitor the risk ratings of the financial institutions holding the Organization's cash and restricted cash on a quarterly basis to ensure they are in compliance with the minimally acceptable ratings as established by the GNMA. Cause Review procedures were not sufficient to ensure expenditures were recorded in accurate expense accounts, in the appropriate period, and were fully accrued. Sufficient controls were not in place to ensure quarterly monitoring of the risk ratings of the financial institutions holding the Organization's cash and restricted cash was being performed and assessed. Effect Certain charges were excluded from the current fiscal year reporting, resulting in overstated expenses. Certain charges related to both the current and next fiscal year were recorded as expense in the current fiscal year, resulting in overstated expenses. Additionally, inaccurate expense classifications could result in improper financial and HUD reporting. Failure to monitor the risk ratings of the financial institutions holding the Organization's cash and restricted cash could result in loss of financial assets. Recommendation Management should revisit and enhance its internal controls and procedures over expenditures to ensure expenses are captured in the correct fiscal period and are properly classified. Management should implement a quarterly review of the risk ratings of all financial institutions holding the Organization's cash and restricted cash to ensure they are in compliance with the minimally acceptable ratings as established by the GNMA. Identification of repeat finding The finding is a repeat of Finding No. 2024-002. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Finding No. 2025-002: Cash, Disbursements, and Classification (Material Weakness) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Allowable costs, Activities allowed or unallowed Statement of condition During the year ended June 30, 2025, the Organization: did not properly classify certain expenditures between expense accounts; did not properly cut off disbursements at fiscal year end, resulting in expenses not being recorded accurately within the current audit period; recorded expenses in the current audit period that apply to future periods; and did not monitor the risk ratings of the financial institutions holding the Organization's cash and restricted cash accounts to ensure they were in compliance with the minimally acceptable ratings as established by the Government National Mortgage Association ("GNMA"). Criteria Management must review invoices after fiscal year end to ensure all expenses related to the fiscal period are being accurately captured. Additionally, management should review expenditures for accurate expense account classification and proper period recording. In accordance with Chapter 2 of the HUD Handbook 4370.2, management should monitor the risk ratings of the financial institutions holding the Organization's cash and restricted cash on a quarterly basis to ensure they are in compliance with the minimally acceptable ratings as established by the GNMA. Cause Review procedures were not sufficient to ensure expenditures were recorded in accurate expense accounts, in the appropriate period, and were fully accrued. Sufficient controls were not in place to ensure quarterly monitoring of the risk ratings of the financial institutions holding the Organization's cash and restricted cash was being performed and assessed. Effect Certain charges were excluded from the current fiscal year reporting, resulting in overstated expenses. Certain charges related to both the current and next fiscal year were recorded as expense in the current fiscal year, resulting in overstated expenses. Additionally, inaccurate expense classifications could result in improper financial and HUD reporting. Failure to monitor the risk ratings of the financial institutions holding the Organization's cash and restricted cash could result in loss of financial assets. Recommendation Management should revisit and enhance its internal controls and procedures over expenditures to ensure expenses are captured in the correct fiscal period and are properly classified. Management should implement a quarterly review of the risk ratings of all financial institutions holding the Organization's cash and restricted cash to ensure they are in compliance with the minimally acceptable ratings as established by the GNMA. Identification of repeat finding The finding is a repeat of Finding No. 2024-002. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Reporting views of responsible officials and planned corrective actions The Organization will enhance its controls to ensure expenses are captured in the correct fiscal period and that at year-end there is a final review of the transactions to ensure completeness, accuracy and proper classification of expenses. The Organization will further put in place a quarterly monitoring and review process to ensure the risk ratings of all financial institutions holding the Organization's cash and restricted cash are consistent with the minimally acceptable ratings established by the GNMA.
2024-002
Finding No. 2025-003: Timely Work Order Completion (Significant Deficiency) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Activities allowed or unallowed Statement of condition During the year ended June 30, 2025, management was unable to provide supporting documentation regarding timely completion of 29 of 54 work orders selected. Criteria HUD projects are required to complete work orders timely. Cause The Organization did not have sufficient controls in place to ensure the timely completion of work orders as required by HUD. Effect Significant repairs could be delayed and repairs could be falsified or duplicated. Recommendation Management should continue to review and enhance its internal controls and procedures over work orders to ensure they are completed on a timely basis. Identification of repeat finding The finding is a repeat of Finding No. 2024-004. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Finding No. 2025-003: Timely Work Order Completion (Significant Deficiency) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Activities allowed or unallowed Statement of condition During the year ended June 30, 2025, management was unable to provide supporting documentation regarding timely completion of 29 of 54 work orders selected. Criteria HUD projects are required to complete work orders timely. Cause The Organization did not have sufficient controls in place to ensure the timely completion of work orders as required by HUD. Effect Significant repairs could be delayed and repairs could be falsified or duplicated. Recommendation Management should continue to review and enhance its internal controls and procedures over work orders to ensure they are completed on a timely basis. Identification of repeat finding The finding is a repeat of Finding No. 2024-004. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Reporting views of responsible officials and planned corrective actions The Organization will enhance its controls to actively monitor the work order system to ensure appropriate repairs are being completed in a timely manner.
2024-004
FAC accepted this audit on October 22, 2024 — management decision was due April 22, 2025.
Finding No. 2024-001: Financial Reporting (Material Weakness) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Reporting Statement of condition The lack of appropriate policies, procedures, and internal processes led to untimely year end close and recording procedures, late filing of required reporting, and incomplete submissions of required data collection forms. Certain information technology controls and procedures were not documented, properly designed, or followed appropriately, including, but not limited to: segregation of administrative user roles from the accounting function, user access review, removal of terminated users, complementary user entity controls assessment, backup restoration testing, penetration testing, and cybersecurity awareness training. Criteria The Organization is required to have internal controls and procedures in place in order to timely and accurately report the results of its operations, close its books, and timely file its reports with the applicable federal agencies. These procedures include documenting levels of review, reconciling accounting records at month-end and year-end close and maintaining a well-documented, designed, and applied information technology environment. Cause Management did not have sufficient internal controls in place to accurately and timely report the results of the Organization's operations and maintain the information technology environment. Effect Insufficient controls, late closing and reconciliation of accounting records, and insufficiently maintained information technology environment could result in accounting errors and theft. A lack of controls over financial reporting can result in untimely filing of required reports or incomplete filings with the regulatory and oversight entities. Recommendation We recommend that management re-evaluate its internal controls, policies and procedures to ensure an appropriate member of management is in place to review the year-end and month-end close processes, as well as journal entries, reconciliations, and other accounting records. Management should appoint an individual to be responsible for the Organization's financial statements and reporting obligations. Management evaluate its controls and procedures over the information technology environment to ensure they are properly documented, designed, and followed, including but not limited to: ensuring segregation of administrative user roles from the accounting function, performing a regular review of user access, ensuring terminated users are removed from all systems and software, performing an assessment of complementary user entity controls for relevant software vendors, performing backup restoration tests and penetration tests, and providing cybersecurity awareness training. Identification of repeat finding The finding is a repeat of Finding No. 2023-002. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Finding No. 2024-001: Financial Reporting (Material Weakness) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Reporting Statement of condition The lack of appropriate policies, procedures, and internal processes led to untimely year end close and recording procedures, late filing of required reporting, and incomplete submissions of required data collection forms. Certain information technology controls and procedures were not documented, properly designed, or followed appropriately, including, but not limited to: segregation of administrative user roles from the accounting function, user access review, removal of terminated users, complementary user entity controls assessment, backup restoration testing, penetration testing, and cybersecurity awareness training. Criteria The Organization is required to have internal controls and procedures in place in order to timely and accurately report the results of its operations, close its books, and timely file its reports with the applicable federal agencies. These procedures include documenting levels of review, reconciling accounting records at month-end and year-end close and maintaining a well-documented, designed, and applied information technology environment. Cause Management did not have sufficient internal controls in place to accurately and timely report the results of the Organization's operations and maintain the information technology environment. Effect Insufficient controls, late closing and reconciliation of accounting records, and insufficiently maintained information technology environment could result in accounting errors and theft. A lack of controls over financial reporting can result in untimely filing of required reports or incomplete filings with the regulatory and oversight entities. Recommendation We recommend that management re-evaluate its internal controls, policies and procedures to ensure an appropriate member of management is in place to review the year-end and month-end close processes, as well as journal entries, reconciliations, and other accounting records. Management should appoint an individual to be responsible for the Organization's financial statements and reporting obligations. Management evaluate its controls and procedures over the information technology environment to ensure they are properly documented, designed, and followed, including but not limited to: ensuring segregation of administrative user roles from the accounting function, performing a regular review of user access, ensuring terminated users are removed from all systems and software, performing an assessment of complementary user entity controls for relevant software vendors, performing backup restoration tests and penetration tests, and providing cybersecurity awareness training. Identification of repeat finding The finding is a repeat of Finding No. 2023-002. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Reporting views of responsible officials and planned corrective actions The Organization will enhance its controls and procedures to ensure financial reporting is complete, accurate, and timely.
2023-002
Finding No. 2024-002: Cash Disbursements Classification (Material Weakness) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Allowable costs, Activities allowed or unallowed Statement of condition During the year ended June 30, 2024, the Organization did not properly classify certain expenditures between expense accounts. Criteria Management should review expenditures for accurate expense account classification to ensure proper financial and HUD reporting. Cause Review procedures were not sufficient to ensure expenditures were recorded in accurate expense accounts. Effect Inaccurate expenses classification could result in improper financial and HUD reporting. Recommendation Management should revisit and enhance its internal controls and procedures over period-end review to ensure proper classification of charges. Identification of repeat finding The finding is a repeat of Finding No. 2023-003. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Finding No. 2024-002: Cash Disbursements Classification (Material Weakness) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Allowable costs, Activities allowed or unallowed Statement of condition During the year ended June 30, 2024, the Organization did not properly classify certain expenditures between expense accounts. Criteria Management should review expenditures for accurate expense account classification to ensure proper financial and HUD reporting. Cause Review procedures were not sufficient to ensure expenditures were recorded in accurate expense accounts. Effect Inaccurate expenses classification could result in improper financial and HUD reporting. Recommendation Management should revisit and enhance its internal controls and procedures over period-end review to ensure proper classification of charges. Identification of repeat finding The finding is a repeat of Finding No. 2023-003. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Reporting views of responsible officials and planned corrective actions The Organization will enhance its controls at year-end to ensure there is a final review of the transactions for proper classification.
2023-003
Finding No. 2024-003: Tenant File Maintenance (Significant Deficiency) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Program Income Statement of condition In connection with the procedures applied to a sample of three tenant lease files, the Organization did not maintain the required lead-based paint disclosure in all selected lease files. Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Cause Management’s policies with respect to the determination of tenant eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, were not consistently followed. Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This noncompliance could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Recommendation Management should review and enhance procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Identification of repeat finding The finding is a repeat of Finding No. 2023-004. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Finding No. 2024-003: Tenant File Maintenance (Significant Deficiency) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Program Income Statement of condition In connection with the procedures applied to a sample of three tenant lease files, the Organization did not maintain the required lead-based paint disclosure in all selected lease files. Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Cause Management’s policies with respect to the determination of tenant eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, were not consistently followed. Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This noncompliance could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Recommendation Management should review and enhance procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Identification of repeat finding The finding is a repeat of Finding No. 2023-004. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Reporting views of responsible officials and planned corrective actions The Organization will enhance its controls to ensure all tenant files are maintained in accordance with the HUD Handbook.
2023-004
Finding No. 2024-004: Timely Work Order Completion (Significant Deficiency) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Activities allowed or unallowed Statement of condition During the year ended June 30, 2024, management was unable to provide supporting documentation regarding timely completion of 27 of 59 work orders selected. Criteria HUD projects are required to complete work orders timely. Cause The Organization did not have sufficient controls in place to ensure the timely completion of work orders as required by HUD. Effect Significant repairs could be delayed and repairs could be falsified or duplicated. Recommendation Management should continue to review and enhance its internal controls and procedures over work orders to ensure they are completed on a timely basis. Identification of repeat finding The finding is a repeat of Finding No. 2023-005. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Finding No. 2024-004: Timely Work Order Completion (Significant Deficiency) Federal Agency: U.S. Department of Housing and Urban Development Federal Program Title: Community Development Block Grants/Entitlement Grants Federal Assistance Listing Number: 14.218 Compliance Requirement: Activities allowed or unallowed Statement of condition During the year ended June 30, 2024, management was unable to provide supporting documentation regarding timely completion of 27 of 59 work orders selected. Criteria HUD projects are required to complete work orders timely. Cause The Organization did not have sufficient controls in place to ensure the timely completion of work orders as required by HUD. Effect Significant repairs could be delayed and repairs could be falsified or duplicated. Recommendation Management should continue to review and enhance its internal controls and procedures over work orders to ensure they are completed on a timely basis. Identification of repeat finding The finding is a repeat of Finding No. 2023-005. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Reporting views of responsible officials and planned corrective actions The Organization will enhance its controls to actively monitor the work order system to ensure appropriate repairs are being completed in a timely manner.
2023-005
FAC accepted this audit on February 2, 2024 — management decision was due August 2, 2024.
Finding No. 2023-001: Restricted Cash (Material Weakness) Statement of condition Special Tests and Provisions During the year ended June 30, 2023, management commingled replacement reserve deposits with operating cash. The replacement reserve deposits made during the year ended June 30, 2023 were below the required amount, resulting in the replacement reserve being underfunded by an additional $139 at June 30, 2023. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to establish and maintain at all times fully funded, separate bank accounts in the name of the entity for all replacement reserve deposits. The Regulatory Agreement, including amendments, requires a monthly deposit of $207 through September 2022 and $212 thereafter in the replacement reserve. Cause The monthly replacement reserve transfer was delayed by several days into the subsequent month due to it being on a set interval of time rather than on a monthly date. This late funding resulted in only 11 deposits being made during the year ended June 30, 2023. Additionally, the amount of the deposits was set at $198 instead of the required amount, resulting in a collective underfunding of $351. Effect Management commingled a portion of the replacement reserve deposits with operating cash, resulting in the potential use of replacement reserve deposits to fund repairs or replacements without obtaining the required prior approval of HUD. Late and insufficient deposits to the replacement reserve could result in insufficient funds for repairs and replacements. Recommendation Management should review and enhance its policies, procedures and internal controls to ensure that replacement reserve deposits are segregated into a separate, restricted cash account. Management should review and enhance policies, procedures and internal controls to ensure that the replacement reserve deposits are made timely and in the amount required by HUD. Identification of repeat finding The finding is a repeat of Finding No. 2022-001. Auditor non-compliance code D - Commingling funds Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Finding No. 2023-001: Restricted Cash (Material Weakness) Statement of condition Special Tests and Provisions During the year ended June 30, 2023, management commingled replacement reserve deposits with operating cash. The replacement reserve deposits made during the year ended June 30, 2023 were below the required amount, resulting in the replacement reserve being underfunded by an additional $139 at June 30, 2023. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to establish and maintain at all times fully funded, separate bank accounts in the name of the entity for all replacement reserve deposits. The Regulatory Agreement, including amendments, requires a monthly deposit of $207 through September 2022 and $212 thereafter in the replacement reserve. Cause The monthly replacement reserve transfer was delayed by several days into the subsequent month due to it being on a set interval of time rather than on a monthly date. This late funding resulted in only 11 deposits being made during the year ended June 30, 2023. Additionally, the amount of the deposits was set at $198 instead of the required amount, resulting in a collective underfunding of $351. Effect Management commingled a portion of the replacement reserve deposits with operating cash, resulting in the potential use of replacement reserve deposits to fund repairs or replacements without obtaining the required prior approval of HUD. Late and insufficient deposits to the replacement reserve could result in insufficient funds for repairs and replacements. Recommendation Management should review and enhance its policies, procedures and internal controls to ensure that replacement reserve deposits are segregated into a separate, restricted cash account. Management should review and enhance policies, procedures and internal controls to ensure that the replacement reserve deposits are made timely and in the amount required by HUD. Identification of repeat finding The finding is a repeat of Finding No. 2022-001. Auditor non-compliance code D - Commingling funds Questioned costs None Finding resolution status In process
The Organization has recently established a procedure whereby on the 25th of every month a transfer occurs. Controls to ensure such transfers are appropriate have also been established.
2022-001
Finding No. 2023-002: Financial Reporting (Material Weakness) Statement of condition Reporting The lack of appropriate policies, procedures, and internal processes led to untimely year end close and recording procedures, late filing of required reporting, and incomplete submissions of required data collection forms. Certain information technology controls and procedures were not documented, properly designed, or followed appropriately, including, but not limited to: segregation of administrative user roles from the accounting function, user access review, removal of terminated users, physical access, complementary user entity controls assessment, backup restoration testing, penetration testing, and cybersecurity awareness training. Criteria The Organization is required to have internal controls and procedures in place in order to timely and accurately report the results of its operations, close its books, and timely file its reports with the applicable federal agencies. These procedures include documenting levels of review, reconciling accounting records at month-end and year-end close and maintaining a well-documented, designed, and applied information technology environment. Cause Management did not have sufficient internal controls in place to accurately and timely report the results of the Organization's operations and maintain the information technology environment. Effect Insufficient controls, late closing and reconciliation of accounting records, and insufficiently maintained information technology environment could result in accounting errors and theft. A lack of controls over financial reporting can result in untimely filing of required reports or incomplete filings with the regulatory and oversight entities. Recommendation We recommend that management re-evaluate its internal controls, policies and procedures to ensure an appropriate member of management is in place to review the year-end and month-end close processes, as well as journal entries, reconciliations, and other accounting records. Management should appoint an individual to be responsible for the Organization's financial statements and reporting obligations. Management evaluate its controls and procedures over the information technology environment to ensure they are properly documented, designed, and followed, including but not limited to: ensuring segregation of administrative user roles from the accounting function, performing a regular review of user access, ensuring terminated users are removed from all systems and software, ensuring restriction of physical access to the system, performing an assessment of complementary user entity controls for relevant software vendors, performing backup restoration tests and penetration tests, and providing cybersecurity awareness training. Identification of repeat finding The finding is a repeat of Finding No. 2022-002 and Finding No. 2022-003. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Finding No. 2023-002: Financial Reporting (Material Weakness) Statement of condition Reporting The lack of appropriate policies, procedures, and internal processes led to untimely year end close and recording procedures, late filing of required reporting, and incomplete submissions of required data collection forms. Certain information technology controls and procedures were not documented, properly designed, or followed appropriately, including, but not limited to: segregation of administrative user roles from the accounting function, user access review, removal of terminated users, physical access, complementary user entity controls assessment, backup restoration testing, penetration testing, and cybersecurity awareness training. Criteria The Organization is required to have internal controls and procedures in place in order to timely and accurately report the results of its operations, close its books, and timely file its reports with the applicable federal agencies. These procedures include documenting levels of review, reconciling accounting records at month-end and year-end close and maintaining a well-documented, designed, and applied information technology environment. Cause Management did not have sufficient internal controls in place to accurately and timely report the results of the Organization's operations and maintain the information technology environment. Effect Insufficient controls, late closing and reconciliation of accounting records, and insufficiently maintained information technology environment could result in accounting errors and theft. A lack of controls over financial reporting can result in untimely filing of required reports or incomplete filings with the regulatory and oversight entities. Recommendation We recommend that management re-evaluate its internal controls, policies and procedures to ensure an appropriate member of management is in place to review the year-end and month-end close processes, as well as journal entries, reconciliations, and other accounting records. Management should appoint an individual to be responsible for the Organization's financial statements and reporting obligations. Management evaluate its controls and procedures over the information technology environment to ensure they are properly documented, designed, and followed, including but not limited to: ensuring segregation of administrative user roles from the accounting function, performing a regular review of user access, ensuring terminated users are removed from all systems and software, ensuring restriction of physical access to the system, performing an assessment of complementary user entity controls for relevant software vendors, performing backup restoration tests and penetration tests, and providing cybersecurity awareness training. Identification of repeat finding The finding is a repeat of Finding No. 2022-002 and Finding No. 2022-003. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
The Organization will enhance its controls and procedures to ensure financial reporting is complete, accurate, and timely.
2022-002, 2022-003
Finding No. 2023-003: Cash Disbursements and Classifications (Material Weakness) Statement of condition Allowable costs Activities allowed or unallowed During the year ended June 30, 2023, the Organization: did not properly classify certain revenues between income accounts; did not properly classify certain expenditures between expense accounts; did not properly cut off disbursements at fiscal year end, resulting in expenses not being recorded within the current audit period; and did not accurately record gross potential rent, due to and from affiliates, and receivables. Criteria Management must review invoices after fiscal year end to ensure all expenses related to the fiscal period are being accurately captured. Additionally, management should review expenditures for accurate expense account classification, and review revenue classifications to the appropriate revenue account recording to ensure proper financial and HUD reporting. Cause Review procedures were not sufficient to ensure expenditures were recorded in accurate expense accounts, and revenue was recorded in the appropriate revenue account. Review procedures were not adequately followed to review subsequent invoices for relevance to the current fiscal period. Effect Certain utility expenses presented for the current fiscal year were not recorded until the next fiscal year, resulting in understated expenses. Additionally, inaccurate expenses and revenues classification could result in improper financial and HUD reporting. Recommendation Management should revisit and enhance its internal controls and procedures over subsequent expenditures to ensure expenses are captured in the correct fiscal period. Management should implement an additional period-end review to ensure proper classification of charges and receipts, complete accrued expenditures, and accurate recording of revenue, due to and from affiliates, and receivables. Identification of repeat finding The finding is a repeat of Finding No. 2022-005. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Finding No. 2023-003: Cash Disbursements and Classifications (Material Weakness) Statement of condition Allowable costs Activities allowed or unallowed During the year ended June 30, 2023, the Organization: did not properly classify certain revenues between income accounts; did not properly classify certain expenditures between expense accounts; did not properly cut off disbursements at fiscal year end, resulting in expenses not being recorded within the current audit period; and did not accurately record gross potential rent, due to and from affiliates, and receivables. Criteria Management must review invoices after fiscal year end to ensure all expenses related to the fiscal period are being accurately captured. Additionally, management should review expenditures for accurate expense account classification, and review revenue classifications to the appropriate revenue account recording to ensure proper financial and HUD reporting. Cause Review procedures were not sufficient to ensure expenditures were recorded in accurate expense accounts, and revenue was recorded in the appropriate revenue account. Review procedures were not adequately followed to review subsequent invoices for relevance to the current fiscal period. Effect Certain utility expenses presented for the current fiscal year were not recorded until the next fiscal year, resulting in understated expenses. Additionally, inaccurate expenses and revenues classification could result in improper financial and HUD reporting. Recommendation Management should revisit and enhance its internal controls and procedures over subsequent expenditures to ensure expenses are captured in the correct fiscal period. Management should implement an additional period-end review to ensure proper classification of charges and receipts, complete accrued expenditures, and accurate recording of revenue, due to and from affiliates, and receivables. Identification of repeat finding The finding is a repeat of Finding No. 2022-005. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
The Organization will enhance its controls to ensure expenses are captured in the correct fiscal period and that at year-end there is a final review of the transactions to ensure completeness, accuracy and proper classification.
2022-005
Finding No. 2023-004: Tenant File Maintenance (Material Weakness) Statement of condition Program Income In connection with the procedures applied to a sample of four tenant lease files, the Organization did not maintain the required lead-based paint disclosure in all selected lease files. Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Cause Management’s policies with respect to the determination of tenant eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, were not consistently followed. Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This noncompliance could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Recommendation Management should review and enhance procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Identification of repeat finding The finding is a repeat of Finding No. 2022-006. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Finding No. 2023-004: Tenant File Maintenance (Material Weakness) Statement of condition Program Income In connection with the procedures applied to a sample of four tenant lease files, the Organization did not maintain the required lead-based paint disclosure in all selected lease files. Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Cause Management’s policies with respect to the determination of tenant eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, were not consistently followed. Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This noncompliance could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Recommendation Management should review and enhance procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Identification of repeat finding The finding is a repeat of Finding No. 2022-006. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
The Organization will enhance its controls to ensure all tenant files are maintained in accordance with the HUD Handbook.
2022-006
Finding No. 2023-005: Timely Work Order Completion (Significant Deficiency) Statement of condition Activities allowed or unallowed During the year ended June 30, 2023, management was unable to demonstrate timely completion of 5 of 30 work orders selected. Criteria HUD projects are required to complete work orders timely. Cause The Organization did not have sufficient controls in place to ensure the timely completion of work orders as required by HUD. Effect Significant repairs could be delayed and repairs could be falsified or duplicated. Recommendation Management should review and enhance its internal controls and procedures over work orders to ensure they are completed on a timely basis. Identification of repeat finding The finding is not a repeat finding. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Finding No. 2023-005: Timely Work Order Completion (Significant Deficiency) Statement of condition Activities allowed or unallowed During the year ended June 30, 2023, management was unable to demonstrate timely completion of 5 of 30 work orders selected. Criteria HUD projects are required to complete work orders timely. Cause The Organization did not have sufficient controls in place to ensure the timely completion of work orders as required by HUD. Effect Significant repairs could be delayed and repairs could be falsified or duplicated. Recommendation Management should review and enhance its internal controls and procedures over work orders to ensure they are completed on a timely basis. Identification of repeat finding The finding is not a repeat finding. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
The Organization will enhance its controls to actively monitor the work order system to ensure appropriate repairs are being completed in a timely manner.
Finding No. 2023-006: Verification of Tenant Assets (Significant Deficiency) Statement of condition Program Income During the year ended June 30, 2023, management did not perform a verification of tenant assets as part of tenant certification and recertification procedures. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to verify tenant assets to ensure appropriate subsidy calculations. Cause The Organization's tenants are multi-handicapped blind low-income adults. The cash accounts held by the tenants are maintained by the Sponsor on behalf of the tenants and therefore other assets are not verified. Effect Subsidy receipts could be overstated. Recommendation Management should review and enhance its certification and annual recertification procedures to include a verification of tenant assets. Identification of repeat finding The finding is a repeat of Finding No. 2022-007. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Finding No. 2023-006: Verification of Tenant Assets (Significant Deficiency) Statement of condition Program Income During the year ended June 30, 2023, management did not perform a verification of tenant assets as part of tenant certification and recertification procedures. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to verify tenant assets to ensure appropriate subsidy calculations. Cause The Organization's tenants are multi-handicapped blind low-income adults. The cash accounts held by the tenants are maintained by the Sponsor on behalf of the tenants and therefore other assets are not verified. Effect Subsidy receipts could be overstated. Recommendation Management should review and enhance its certification and annual recertification procedures to include a verification of tenant assets. Identification of repeat finding The finding is a repeat of Finding No. 2022-007. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
The Organization will enhance its procedures to ensure verification of tenant assets is performed during recertification.
2022-007
FAC accepted this audit on September 27, 2023 — management decision was due March 27, 2024.
Finding No. 2022-001: Restricted Cash (Material Weakness) Statement of condition Special Tests and Provisions During the year ended June 30, 2022, management commingled replacement reserve deposits, tenant security deposits, and operating cash. For one month of the fiscal year, the monthly replacement reserve deposit was funded in the subsequent month. Security deposit funding liability was not properly tracked. Criteria In accordance with the HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to establish and maintain at all times fully funded, separate bank accounts in the name of the entity for all security deposits collected and for residual receipts deposits. The Organization is required a monthly deposit of $198 through September, and $207 commencing in September in the replacement reserve. Security deposits owed to tenants are required to be tracked for accurate financial and HUD reporting. Cause Certain tenant security deposits, replacement reserve deposits, and operating cash were commingled as of June 30, 2022. The Sponsor funds tenant security deposits and the deposits funded during the year were included within the amounts owed to the Sponsor instead of within the tenant security deposit liability. The monthly replacement reserve transfer was delayed by several days into the subsequent month due to it being on a set interval of time rather than on a monthly date. Effect Management commingled certain tenant security deposits, replacement reserve deposits, and operating cash, resulting in the potential use of tenant security deposit cash or replacement reserve deposits to fund repairs or replacements without obtaining the required prior approval of HUD. Inaccurate tracking of the tenant security deposit liability could result in understated liability and improper refunding of tenant security deposits. Late deposits to the replacement reserve could result in underfunding of the replacement reserve. Recommendation Management should review and enhance policies, procedures and internal controls to ensure that all tenant security deposits and residual receipts deposits are segregated into separate, restricted cash accounts. Management should revisit its review procedures for tracking tenant security deposits and its timing schedule for making deposits to the replacement reserve. Identification of repeat finding The finding is a repeat of Finding No. 2021-001. Auditor non-compliance code D - Commingling funds Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will ensure that security deposits are tracked so they can be recorded accordingly when there is a move in and/or move out. Moving forward management will put in place controls to ensure that the calculation is done at the end of the fiscal year.
Show full finding ▾Hide full finding ▴Finding No. 2022-001: Restricted Cash (Material Weakness) Statement of condition Special Tests and Provisions During the year ended June 30, 2022, management commingled replacement reserve deposits, tenant security deposits, and operating cash. For one month of the fiscal year, the monthly replacement reserve deposit was funded in the subsequent month. Security deposit funding liability was not properly tracked. Criteria In accordance with the HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to establish and maintain at all times fully funded, separate bank accounts in the name of the entity for all security deposits collected and for residual receipts deposits. The Organization is required a monthly deposit of $198 through September, and $207 commencing in September in the replacement reserve. Security deposits owed to tenants are required to be tracked for accurate financial and HUD reporting. Cause Certain tenant security deposits, replacement reserve deposits, and operating cash were commingled as of June 30, 2022. The Sponsor funds tenant security deposits and the deposits funded during the year were included within the amounts owed to the Sponsor instead of within the tenant security deposit liability. The monthly replacement reserve transfer was delayed by several days into the subsequent month due to it being on a set interval of time rather than on a monthly date. Effect Management commingled certain tenant security deposits, replacement reserve deposits, and operating cash, resulting in the potential use of tenant security deposit cash or replacement reserve deposits to fund repairs or replacements without obtaining the required prior approval of HUD. Inaccurate tracking of the tenant security deposit liability could result in understated liability and improper refunding of tenant security deposits. Late deposits to the replacement reserve could result in underfunding of the replacement reserve. Recommendation Management should review and enhance policies, procedures and internal controls to ensure that all tenant security deposits and residual receipts deposits are segregated into separate, restricted cash accounts. Management should revisit its review procedures for tracking tenant security deposits and its timing schedule for making deposits to the replacement reserve. Identification of repeat finding The finding is a repeat of Finding No. 2021-001. Auditor non-compliance code D - Commingling funds Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will ensure that security deposits are tracked so they can be recorded accordingly when there is a move in and/or move out. Moving forward management will put in place controls to ensure that the calculation is done at the end of the fiscal year.
Reporting views of responsible officials and planned corrective actions Management will ensure that security deposits are tracked so they can be recorded accordingly when there is a move in and/or move out. Moving forward management will put in place controls to ensure that the calculation is done at the end of the fiscal year.
2021-001
Finding No. 2022-002: Accounting for Debt (Material Weakness) Allowable costs Activities allowed or unallowed During the year ended June 30, 2022, principle, accrued interest, and interest expense on the HUD Section 202 Direct Loan (mortgage payable) and Community Development Block Grant (the residual receipts note payable) were not properly recorded, which resulted in the Schedule being inaccurately stated during the year. Criteria The Organization is required to have controls and procedures in place in order to properly account for principle, accrued interest, and interest expense on debt, as well as to properly and accurately present the Schedule. Cause The monthly payments of $2,661 on the HUD Section 202 Direct Loan (mortgage payable) are withheld by HUD from the monthly HAP contract rental assistance payments receipts. Management did not properly apply the withholding against interest for the year ended June 30, 2022. The HUD Community Development Block Grant (the residual receipts note payable) bears interest at a rate of 3% per annum and is payable from the residual receipts balance held by the Organization in connection with Section 202 HUD Direct Loan. At the end of each year, any unpaid, accrued interest on the note is converted to note principal. Management failed to convert the unpaid, accrued interest to principal and therefore did not record interest expense and accrued interest on the appropriate principal balance for the year ended June 30, 2022. Effect Management did not have sufficient controls and procedures in place in order to properly account for interest expense, accrued interest and interest payments on debt. The Schedule could be inaccurately reported to the federal government and HUD. Recommendation Management should review and enhance its controls and procedures for recording principle, accrued interest, and interest expense on the Organization's debt and therefore properly stating the Schedule. Identification of repeat finding The finding is a repeat of Finding No. 2021-002. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will put in place controls and procedures to ensure principle, accrued interest, and interest expense on debt is properly accounted for and reported
Show full finding ▾Hide full finding ▴Finding No. 2022-002: Accounting for Debt (Material Weakness) Allowable costs Activities allowed or unallowed During the year ended June 30, 2022, principle, accrued interest, and interest expense on the HUD Section 202 Direct Loan (mortgage payable) and Community Development Block Grant (the residual receipts note payable) were not properly recorded, which resulted in the Schedule being inaccurately stated during the year. Criteria The Organization is required to have controls and procedures in place in order to properly account for principle, accrued interest, and interest expense on debt, as well as to properly and accurately present the Schedule. Cause The monthly payments of $2,661 on the HUD Section 202 Direct Loan (mortgage payable) are withheld by HUD from the monthly HAP contract rental assistance payments receipts. Management did not properly apply the withholding against interest for the year ended June 30, 2022. The HUD Community Development Block Grant (the residual receipts note payable) bears interest at a rate of 3% per annum and is payable from the residual receipts balance held by the Organization in connection with Section 202 HUD Direct Loan. At the end of each year, any unpaid, accrued interest on the note is converted to note principal. Management failed to convert the unpaid, accrued interest to principal and therefore did not record interest expense and accrued interest on the appropriate principal balance for the year ended June 30, 2022. Effect Management did not have sufficient controls and procedures in place in order to properly account for interest expense, accrued interest and interest payments on debt. The Schedule could be inaccurately reported to the federal government and HUD. Recommendation Management should review and enhance its controls and procedures for recording principle, accrued interest, and interest expense on the Organization's debt and therefore properly stating the Schedule. Identification of repeat finding The finding is a repeat of Finding No. 2021-002. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will put in place controls and procedures to ensure principle, accrued interest, and interest expense on debt is properly accounted for and reported
Reporting views of responsible officials and planned corrective actions Management will put in place controls and procedures to ensure principle, accrued interest, and interest expense on debt is properly accounted for and reported.
2021-002
Finding No. 2022-003: Financial Reporting (Material Weakness) Statement of condition Reporting The lack of appropriate policies, procedures, and internal processes led to untimely year end close and recording procedures, late filing of required reporting, and incomplete submissions of required data collection forms. Certain information technology controls and procedures were not documented, properly designed, or followed appropriately, including, but not limited to: segregation of administrative user roles from the accounting function, user access review, removal of terminated users, physical access, complementary user entity controls assessment, backup restoration testing, penetration testing, and cybersecurity awareness training. Criteria The Organization is required to have internal controls and procedures in place in order to timely and accurately report the results of its operations, close its books, and timely file its reports with the applicable federal agencies. These procedures include documenting levels of review, reconciling accounting records at month-end and year-end close and maintaining a well-documented, designed, and applied information technology environment. Cause Management did not have sufficient internal controls in place to accurately and timely report the results of the Organization's operations and maintain the information technology environment. Effect Insufficient controls, late closing and reconciliation of accounting records, and insufficiently maintained information technology environment could result in accounting errors and theft. A lack of controls over financial reporting can result in untimely filing of required reports or incomplete filings with the regulatory and oversight entities. Recommendation We recommend that management re-evaluate its internal controls, policies and procedures to ensure an appropriate member of management is in place to review the year-end and month-end close processes, as well as journal entries, reconciliations, and other accounting records. Management should appoint an individual to be responsible for the Organization's financial statements and reporting obligations. Management evaluate its controls and procedures over the information technology environment to ensure they are properly documented, designed, and followed, including but not limited to: ensuring segregation of administrative user roles from the accounting function, performing a regular review of user access, ensuring terminated users are removed from all systems and software, ensuring restriction of physical access to the system, performing an assessment of complementary user entity controls for relevant software vendors, performing backup restoration tests and penetration tests, and providing cybersecurity awareness training. Identification of repeat finding The finding is a repeat of Finding No. 2021-003. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will put in place controls and procedures to ensure financial reporting is complete, accurate, and timely.
Show full finding ▾Hide full finding ▴Finding No. 2022-003: Financial Reporting (Material Weakness) Statement of condition Reporting The lack of appropriate policies, procedures, and internal processes led to untimely year end close and recording procedures, late filing of required reporting, and incomplete submissions of required data collection forms. Certain information technology controls and procedures were not documented, properly designed, or followed appropriately, including, but not limited to: segregation of administrative user roles from the accounting function, user access review, removal of terminated users, physical access, complementary user entity controls assessment, backup restoration testing, penetration testing, and cybersecurity awareness training. Criteria The Organization is required to have internal controls and procedures in place in order to timely and accurately report the results of its operations, close its books, and timely file its reports with the applicable federal agencies. These procedures include documenting levels of review, reconciling accounting records at month-end and year-end close and maintaining a well-documented, designed, and applied information technology environment. Cause Management did not have sufficient internal controls in place to accurately and timely report the results of the Organization's operations and maintain the information technology environment. Effect Insufficient controls, late closing and reconciliation of accounting records, and insufficiently maintained information technology environment could result in accounting errors and theft. A lack of controls over financial reporting can result in untimely filing of required reports or incomplete filings with the regulatory and oversight entities. Recommendation We recommend that management re-evaluate its internal controls, policies and procedures to ensure an appropriate member of management is in place to review the year-end and month-end close processes, as well as journal entries, reconciliations, and other accounting records. Management should appoint an individual to be responsible for the Organization's financial statements and reporting obligations. Management evaluate its controls and procedures over the information technology environment to ensure they are properly documented, designed, and followed, including but not limited to: ensuring segregation of administrative user roles from the accounting function, performing a regular review of user access, ensuring terminated users are removed from all systems and software, ensuring restriction of physical access to the system, performing an assessment of complementary user entity controls for relevant software vendors, performing backup restoration tests and penetration tests, and providing cybersecurity awareness training. Identification of repeat finding The finding is a repeat of Finding No. 2021-003. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will put in place controls and procedures to ensure financial reporting is complete, accurate, and timely.
Reporting views of responsible officials and planned corrective actions Management will put in place controls and procedures to ensure financial reporting is complete, accurate, and timely.
2021-003
Finding No. 2022-004: Expense Allocations (Material Weakness) Statement of condition Allowable costs Activities allowed or unallowed Special tests and provisions Management has not reviewed its allocated costs calculations for accuracy and completeness of insurance and payroll costs incurred by the Organization. Criteria The Organization is required to have controls and procedures in place in order to accurately record costs incurred by the Organization. Cause Management did not have appropriate controls in place to review the allocation percentages for completeness and accuracy. Effect Out-of-date allocations could result in understated or overstated expenses and liabilities of the Organization, as well as theft. Recommendation Management should review and enhance its internal controls over payroll and insurance allocations to ensure the costs recorded by the Organization are representative of its share of the charges. Identification of repeat finding The finding is a repeat of Finding No. 2021-005. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will put in place controls and procedures to annually evaluate the percentage of time staff dedicate to the organization to determine the correct allocation for payroll.
Show full finding ▾Hide full finding ▴Finding No. 2022-004: Expense Allocations (Material Weakness) Statement of condition Allowable costs Activities allowed or unallowed Special tests and provisions Management has not reviewed its allocated costs calculations for accuracy and completeness of insurance and payroll costs incurred by the Organization. Criteria The Organization is required to have controls and procedures in place in order to accurately record costs incurred by the Organization. Cause Management did not have appropriate controls in place to review the allocation percentages for completeness and accuracy. Effect Out-of-date allocations could result in understated or overstated expenses and liabilities of the Organization, as well as theft. Recommendation Management should review and enhance its internal controls over payroll and insurance allocations to ensure the costs recorded by the Organization are representative of its share of the charges. Identification of repeat finding The finding is a repeat of Finding No. 2021-005. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will put in place controls and procedures to annually evaluate the percentage of time staff dedicate to the organization to determine the correct allocation for payroll.
Reporting views of responsible officials and planned corrective actions Management will put in place controls and procedures to annually evaluate the percentage of time staff dedicate to the organization to determine the correct allocation for payroll.
2021-005
Finding No. 2022-005: Cash Disbursements and Classifications (Material Weakness) Statement of condition Allowable costs Activities allowed or unallowed During the year ended June 30, 2022, the Organization: ? did not properly capitalize certain expenditures as fixed assets in accordance with the Organization's capitalization policy and properly depreciate those fixed assets; ? did not properly classify certain expenditures between expense accounts; ? did not properly classify certain receipts among revenue accounts; ? did not properly cut off disbursements at fiscal year end, resulting in expenses not being recorded within the current audit period; and ? did not accurately record gross potential rent, due to and from affiliates, and receivables. Criteria The Organization is required to maintain the books on a U.S. GAAP basis, including properly classified expenses and fixed assets, complete accrued expenditures, proper capitalization of fixed assets, and accurate recording of revenue, due to and from affiliates, and receivables. Cause Review procedures were not sufficient to ensure the Organization's books were maintained on a U.S. GAAP basis. Effect Failure to maintain the books on a U.S. GAAP basis could result in improper financial and HUD reporting. Recommendation Management should revisit and enhance its internal controls and procedures over subsequent expenditures to ensure expenses are captured in the correct fiscal period. Management should implement an additional period-end review to ensure proper classification of expenses and fixed assets, complete accrued expenditures, proper capitalization of fixed assets, and accurate recording of revenue, due to and from affiliates, and receivables. Identification of repeat finding The finding is a repeat of Finding No. 2021-006. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will ensure that moving forward there are controls in place to ensure expenses are captured in the correct fiscal period and that at year end there is a final review of the transactions to ensure that everything is not only properly entered, but properly classified as well.
Show full finding ▾Hide full finding ▴Finding No. 2022-005: Cash Disbursements and Classifications (Material Weakness) Statement of condition Allowable costs Activities allowed or unallowed During the year ended June 30, 2022, the Organization: ? did not properly capitalize certain expenditures as fixed assets in accordance with the Organization's capitalization policy and properly depreciate those fixed assets; ? did not properly classify certain expenditures between expense accounts; ? did not properly classify certain receipts among revenue accounts; ? did not properly cut off disbursements at fiscal year end, resulting in expenses not being recorded within the current audit period; and ? did not accurately record gross potential rent, due to and from affiliates, and receivables. Criteria The Organization is required to maintain the books on a U.S. GAAP basis, including properly classified expenses and fixed assets, complete accrued expenditures, proper capitalization of fixed assets, and accurate recording of revenue, due to and from affiliates, and receivables. Cause Review procedures were not sufficient to ensure the Organization's books were maintained on a U.S. GAAP basis. Effect Failure to maintain the books on a U.S. GAAP basis could result in improper financial and HUD reporting. Recommendation Management should revisit and enhance its internal controls and procedures over subsequent expenditures to ensure expenses are captured in the correct fiscal period. Management should implement an additional period-end review to ensure proper classification of expenses and fixed assets, complete accrued expenditures, proper capitalization of fixed assets, and accurate recording of revenue, due to and from affiliates, and receivables. Identification of repeat finding The finding is a repeat of Finding No. 2021-006. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will ensure that moving forward there are controls in place to ensure expenses are captured in the correct fiscal period and that at year end there is a final review of the transactions to ensure that everything is not only properly entered, but properly classified as well.
Reporting views of responsible officials and planned corrective actions Management will ensure that moving forward there are controls in place to ensure expenses are captured in the correct fiscal period and that at year end there is a final review of the transactions to ensure that everything is not only properly entered, but properly classified as well.
2021-006
Finding No. 2022-006: Tenant File Maintenance (Material Weakness) Statement of condition Program Income In connection with the procedures applied to a sample of four tenant lease files, the Organization did not maintain the lead-based paint disclosure for all tenant lease files selected. Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Cause Management?s policies with respect to the determination of tenant eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, were not consistently followed. Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This noncompliance could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Recommendation Management should review and enhance procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Identification of repeat finding The finding is a repeat of Finding No. 2021-007. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will put controls and procedures in place that ensure all tenant files are maintained in accordance with the HUD Handbook.
Show full finding ▾Hide full finding ▴Finding No. 2022-006: Tenant File Maintenance (Material Weakness) Statement of condition Program Income In connection with the procedures applied to a sample of four tenant lease files, the Organization did not maintain the lead-based paint disclosure for all tenant lease files selected. Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Cause Management?s policies with respect to the determination of tenant eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, were not consistently followed. Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This noncompliance could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Recommendation Management should review and enhance procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Identification of repeat finding The finding is a repeat of Finding No. 2021-007. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will put controls and procedures in place that ensure all tenant files are maintained in accordance with the HUD Handbook.
Reporting views of responsible officials and planned corrective actions Management will put controls and procedures in place that ensure all tenant files are maintained in accordance with the HUD Handbook.
2021-007
Finding No. 2022-007: Verification of Tenant Assets (Significant Deficiency) Statement of condition Program Income During the year ended June 30, 2022, management did not perform a verification of tenant assets as part of tenant certification and recertification procedures. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to verify tenant assets to ensure appropriate subsidy calculations. Cause The Organization's tenants are multi-handicapped blind low-income adults. The cash accounts held by the tenants are maintained by the Sponsor on behalf of the tenants and therefore other assets are not verified. Effect Subsidy receipts could be overstated. Recommendation Management should revisit and enhance its certification and annual recertification procedures to include a verification of tenant assets. Identification of repeat finding The finding is a repeat of Finding No. 2021-008. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will put in place procedures to ensure verification of tenant assets is done during recertification.
Show full finding ▾Hide full finding ▴Finding No. 2022-007: Verification of Tenant Assets (Significant Deficiency) Statement of condition Program Income During the year ended June 30, 2022, management did not perform a verification of tenant assets as part of tenant certification and recertification procedures. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to verify tenant assets to ensure appropriate subsidy calculations. Cause The Organization's tenants are multi-handicapped blind low-income adults. The cash accounts held by the tenants are maintained by the Sponsor on behalf of the tenants and therefore other assets are not verified. Effect Subsidy receipts could be overstated. Recommendation Management should revisit and enhance its certification and annual recertification procedures to include a verification of tenant assets. Identification of repeat finding The finding is a repeat of Finding No. 2021-008. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process Reporting views of responsible officials and planned corrective actions Management will put in place procedures to ensure verification of tenant assets is done during recertification.
Reporting views of responsible officials and planned corrective actions Management will put in place procedures to ensure verification of tenant assets is done during recertification.
2021-008
Finding No. 2022-008: Work Order Log (Significant Deficiency) Statement of condition Activities allowed or unallowed During the year ended June 30, 2022, management did not maintain a log of work orders processed. Criteria HUD projects are required to maintain a log of work orders processed. Cause The Organization did not have a system in place to summarize and collect work orders for the fiscal year. Effect Significant repairs could be delayed and repairs could be falsified or duplicated. Recommendation Management should revisit and enhance its internal controls and procedures over work orders to ensure a log is maintained on a timely basis. Identification of repeat finding The finding is a repeat of Finding No. 2021-009. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status Remediated subsequent to year end. Reporting views of responsible officials and planned corrective actions Management put in place an electronic work order system that keeps track of the work orders for the property and has put controls in place to actively monitor the system to ensure appropriate repairs are being completed in a timely manner.
Show full finding ▾Hide full finding ▴Finding No. 2022-008: Work Order Log (Significant Deficiency) Statement of condition Activities allowed or unallowed During the year ended June 30, 2022, management did not maintain a log of work orders processed. Criteria HUD projects are required to maintain a log of work orders processed. Cause The Organization did not have a system in place to summarize and collect work orders for the fiscal year. Effect Significant repairs could be delayed and repairs could be falsified or duplicated. Recommendation Management should revisit and enhance its internal controls and procedures over work orders to ensure a log is maintained on a timely basis. Identification of repeat finding The finding is a repeat of Finding No. 2021-009. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status Remediated subsequent to year end. Reporting views of responsible officials and planned corrective actions Management put in place an electronic work order system that keeps track of the work orders for the property and has put controls in place to actively monitor the system to ensure appropriate repairs are being completed in a timely manner.
Reporting views of responsible officials and planned corrective actions Management put in place an electronic work order system that keeps track of the work orders for the property and has put controls in place to actively monitor the system to ensure appropriate repairs are being completed in a timely manner.
2021-009
FAC accepted this audit on February 8, 2023 — management decision was due August 8, 2023.
Statement of condition Special Tests and Provisions During the year ended June 30, 2021, management commingled certain security deposits, replacement reserves and operating cash. For three months during the year ended June 30, 2021, the monthly replacement reserve deposit was funded in the subsequent month. Security deposit funding liability was not properly tracked and certain tenant security deposits were commingled with operating funds. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to establish and maintain at all times fully funded, separate bank accounts in the name of the entity for all security deposits collected and for replacement reserves. The Regulatory Agreement requires a monthly deposit in the replacement reserve. Security deposits owed to tenants are required to be tracked for accurate financial and HUD reporting. Cause Certain tenant security deposits and replacement reserves were commingled in the replacement reserve account or operating cash account and were not transferred into segregated accounts as of June 30, 2021. The Sponsor funds tenant security deposits and the deposits funded during the year were included within the amounts owed to the Sponsor instead of within the tenant security deposit liability. The monthly replacement reserve transfer was delayed by several days into the subsequent month due to it being on a set interval of time rather than on a monthly date. Effect or potential effect Management commingled certain tenant security deposits and replacement reserves with its replacement reserve and operating cash accounts, resulting in the potential use of tenant security deposit cash or replacement reserves to fund repairs or replacements without obtaining the required prior approval of HUD. Inaccurate tracking of the tenant security deposit liability could result in understated liability and improper refunding of tenant security deposits. Late deposits to the replacement reserve could result in underfunding of the replacement reserve. Recommendation Management should review and enhance policies, procedures, and internal controls to ensure that all tenant security deposits and replacement reserves are segregated into separate, restricted cash accounts. Management should revisit its review procedures for tracking tenant security deposits and its timing schedule for making deposits to the replacement reserve. Identification of repeat finding The finding is a repeat of Finding No. 2020-009 reported in the audit for the year ended June 30, 2020. Auditor non-compliance code D - Commingling funds Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Statement of condition Special Tests and Provisions During the year ended June 30, 2021, management commingled certain security deposits, replacement reserves and operating cash. For three months during the year ended June 30, 2021, the monthly replacement reserve deposit was funded in the subsequent month. Security deposit funding liability was not properly tracked and certain tenant security deposits were commingled with operating funds. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to establish and maintain at all times fully funded, separate bank accounts in the name of the entity for all security deposits collected and for replacement reserves. The Regulatory Agreement requires a monthly deposit in the replacement reserve. Security deposits owed to tenants are required to be tracked for accurate financial and HUD reporting. Cause Certain tenant security deposits and replacement reserves were commingled in the replacement reserve account or operating cash account and were not transferred into segregated accounts as of June 30, 2021. The Sponsor funds tenant security deposits and the deposits funded during the year were included within the amounts owed to the Sponsor instead of within the tenant security deposit liability. The monthly replacement reserve transfer was delayed by several days into the subsequent month due to it being on a set interval of time rather than on a monthly date. Effect or potential effect Management commingled certain tenant security deposits and replacement reserves with its replacement reserve and operating cash accounts, resulting in the potential use of tenant security deposit cash or replacement reserves to fund repairs or replacements without obtaining the required prior approval of HUD. Inaccurate tracking of the tenant security deposit liability could result in understated liability and improper refunding of tenant security deposits. Late deposits to the replacement reserve could result in underfunding of the replacement reserve. Recommendation Management should review and enhance policies, procedures, and internal controls to ensure that all tenant security deposits and replacement reserves are segregated into separate, restricted cash accounts. Management should revisit its review procedures for tracking tenant security deposits and its timing schedule for making deposits to the replacement reserve. Identification of repeat finding The finding is a repeat of Finding No. 2020-009 reported in the audit for the year ended June 30, 2020. Auditor non-compliance code D - Commingling funds Questioned costs None Finding resolution status In process
Restricted Cash - Auto Payments to Monthly Reserves have been restored.
2020-009
Statement of condition Allowable costs Activities allowed or unallowed During the year ended June 30, 2021, interest expense on the HUD Section 202 Direct Loan (mortgage payable) and Community Development Block Grant (the residual receipts note payable) was not properly recorded. Criteria The Organization is required to have controls and procedures in place in order to properly account for interest expense, accrued interest and interest payments on debt. Cause The monthly payments of $2,661 on the HUD Section 202 Direct Loan (mortgage payable) are withheld by HUD from the monthly Section 8 Housing Assistance Payments ("HAP") contract rental assistance payments receipts. Management did not properly apply the withholding against interest for the year ended June 30, 2021. The HUD Community Development Block Grant (the residual receipts note payable) bears interest at a rate of 3% per annum and is payable from the residual receipts balance held by the Organization in connection with Section 202 HUD Direct Loan. At the end of each year, any unpaid, accrued interest on the note is converted to note principal. Management failed to convert the unpaid, accrued interest to principal and therefore did not record interest expense and accrued interest on the appropriate principal balance for the year ended June 30, 2021. Effect Management did not have sufficient controls and procedures in place in order to properly account for interest expense, accrued interest and interest payments on debt. Recommendation Management should review and enhance its controls and procedures for recording interest expense, accrued interest and interest payments on debt. Identification of repeat finding The finding is a repeat of Finding No. 2020-004 reported in the audit for the year ended June 30, 2020. Auditor non-compliance code S - Internal control deficiencies Questioned costs $55,014 Finding resolution status In process
Show full finding ▾Hide full finding ▴Statement of condition Allowable costs Activities allowed or unallowed During the year ended June 30, 2021, interest expense on the HUD Section 202 Direct Loan (mortgage payable) and Community Development Block Grant (the residual receipts note payable) was not properly recorded. Criteria The Organization is required to have controls and procedures in place in order to properly account for interest expense, accrued interest and interest payments on debt. Cause The monthly payments of $2,661 on the HUD Section 202 Direct Loan (mortgage payable) are withheld by HUD from the monthly Section 8 Housing Assistance Payments ("HAP") contract rental assistance payments receipts. Management did not properly apply the withholding against interest for the year ended June 30, 2021. The HUD Community Development Block Grant (the residual receipts note payable) bears interest at a rate of 3% per annum and is payable from the residual receipts balance held by the Organization in connection with Section 202 HUD Direct Loan. At the end of each year, any unpaid, accrued interest on the note is converted to note principal. Management failed to convert the unpaid, accrued interest to principal and therefore did not record interest expense and accrued interest on the appropriate principal balance for the year ended June 30, 2021. Effect Management did not have sufficient controls and procedures in place in order to properly account for interest expense, accrued interest and interest payments on debt. Recommendation Management should review and enhance its controls and procedures for recording interest expense, accrued interest and interest payments on debt. Identification of repeat finding The finding is a repeat of Finding No. 2020-004 reported in the audit for the year ended June 30, 2020. Auditor non-compliance code S - Internal control deficiencies Questioned costs $55,014 Finding resolution status In process
Controller now reviews monthly rent generation with HUD accountant. Boston Post vs Contracts and leases. TLC vs Contracts and lease. Vouchers to HUD and bill backs TLC are approved by Controller.
2020-004
Statement of condition Allowable costs Activities allowed or unallowed Special tests and provisions During the year ended June 30, 2021, the Organization did not maintain its permanent records, including but not limited to: the loan agreement supporting the HUD Section 202 promissory note, HUD Section 8 HAP contract and the Organization's Tenant Selection Plan. Criteria In order to maintain compliance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, the Organization must utilize and refer to its permanent records. Cause The Organization failed to maintain permanent document records required by HUD. Effect Management did not properly maintain the permanent records of the Organization, resulting in possible unidentified noncompliance, inaccurate reporting, or other exceptions to the HUD regulatory provisions. Recommendation Management should implement a record-storing function of its internal controls to prevent future lost documentation, and reviews of that function to ensure the storage is properly maintained. Identification of repeat finding The finding is a repeat of Finding No. 2020-006 reported in the audit for the year ended June 30, 2020. Auditor non-compliance code S - Internal control deficiencies Questioned costs None noted Finding resolution status In process
Show full finding ▾Hide full finding ▴Statement of condition Allowable costs Activities allowed or unallowed Special tests and provisions During the year ended June 30, 2021, the Organization did not maintain its permanent records, including but not limited to: the loan agreement supporting the HUD Section 202 promissory note, HUD Section 8 HAP contract and the Organization's Tenant Selection Plan. Criteria In order to maintain compliance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, the Organization must utilize and refer to its permanent records. Cause The Organization failed to maintain permanent document records required by HUD. Effect Management did not properly maintain the permanent records of the Organization, resulting in possible unidentified noncompliance, inaccurate reporting, or other exceptions to the HUD regulatory provisions. Recommendation Management should implement a record-storing function of its internal controls to prevent future lost documentation, and reviews of that function to ensure the storage is properly maintained. Identification of repeat finding The finding is a repeat of Finding No. 2020-006 reported in the audit for the year ended June 30, 2020. Auditor non-compliance code S - Internal control deficiencies Questioned costs None noted Finding resolution status In process
These files have been recovered.
2020-006
Statement of condition Allowable costs Activities allowed or unallowed Special tests and provisions Management has not reviewed its allocated costs calculations for accuracy and completeness of insurance and payroll costs incurred by the Organization. Criteria The Organization is required to have controls and procedures in place in order to accurately record costs incurred by the Organization. Cause Management did not have appropriate controls in place to review the allocation percentages for completeness and accuracy. Effect Out-of-date allocations could result in understated or overstated expenses and liabilities of the Organization, as well as theft. Recommendation Management should review and enhance its internal controls over payroll and insurance allocations to ensure the costs recorded by the Organization are representative of its share of the charges. Identification of repeat finding The finding is a repeat of Finding No. 2020-007 reported in the audit for the year ended June 30, 2020. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Statement of condition Allowable costs Activities allowed or unallowed Special tests and provisions Management has not reviewed its allocated costs calculations for accuracy and completeness of insurance and payroll costs incurred by the Organization. Criteria The Organization is required to have controls and procedures in place in order to accurately record costs incurred by the Organization. Cause Management did not have appropriate controls in place to review the allocation percentages for completeness and accuracy. Effect Out-of-date allocations could result in understated or overstated expenses and liabilities of the Organization, as well as theft. Recommendation Management should review and enhance its internal controls over payroll and insurance allocations to ensure the costs recorded by the Organization are representative of its share of the charges. Identification of repeat finding The finding is a repeat of Finding No. 2020-007 reported in the audit for the year ended June 30, 2020. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Review and changes in charges to HUD allocation for labor. Percentages increase for maintenance and Executive time.
2020-007
Statement of condition Allowable costs Activities allowed or unallowed During the year ended June 30, 2021, management did not properly record rental revenue, vacancies and due to/from related party for the total gross potential rent provided for under the terms of the HAP contract. Additionally, management recorded rental assistance payments receivable received during the year ended June 30, 2021, as rental revenue. Management did not properly cut off disbursements at fiscal year end, resulting in expenses being recorded incorrectly within the current audit period. Management did not properly capitalize fixed assets or properly classify capitalized costs among fixed asset categories. Criteria The Organization is required to have controls and procedures in place in order to accurately record rental revenue of the Organization. Furthermore, management must review invoices after fiscal year end to ensure all expenses related to the fiscal period are being accurately captured. Finally, management must properly capitalize fixed assets in accordance with the Organization's capitalization policy and determine the classification consistent with accounting, industry and HUD standards. Cause Management did not have appropriate controls in place to review the recording of rental revenue for completeness and accuracy. Review procedures were not adequately followed to review subsequent invoices for relevance to the current fiscal period or to properly capitalize and classify disbursements as fixed assets. Effect Management did not properly record rental revenue, resulting in possible overstatement of rental revenue, rental assistance payments receivable, and due to related party. Furthermore, certain utility and contract expenses presented for the current fiscal year were not recorded until the next fiscal year, resulting in understated expenses. Finally, certain disbursements were not capitalized to fixed assets in accordance with the Organization's policy, and those disbursements that were capitalized were not classified consistent with accounting, industry and HUD standards. Recommendation Management should review and enhance its internal controls over rental revenue recording to ensure rental revenue is complete and accurate for the year as provided for in the HAP contract, receivables are properly recorded, and due to related party is accurate. Management should revisit and enhance its review procedures over subsequent expenditures to ensure expenses are captured in the correct fiscal period and to properly capitalize and classify disbursements as fixed assets. Identification of repeat finding The finding is a repeat of Finding No. 2020-008 reported in the audit for the year ended June 30, 2020. Auditor non-compliance code S - Internal control deficiencies Questioned costs $25,996 Finding resolution status In process
Show full finding ▾Hide full finding ▴Statement of condition Allowable costs Activities allowed or unallowed During the year ended June 30, 2021, management did not properly record rental revenue, vacancies and due to/from related party for the total gross potential rent provided for under the terms of the HAP contract. Additionally, management recorded rental assistance payments receivable received during the year ended June 30, 2021, as rental revenue. Management did not properly cut off disbursements at fiscal year end, resulting in expenses being recorded incorrectly within the current audit period. Management did not properly capitalize fixed assets or properly classify capitalized costs among fixed asset categories. Criteria The Organization is required to have controls and procedures in place in order to accurately record rental revenue of the Organization. Furthermore, management must review invoices after fiscal year end to ensure all expenses related to the fiscal period are being accurately captured. Finally, management must properly capitalize fixed assets in accordance with the Organization's capitalization policy and determine the classification consistent with accounting, industry and HUD standards. Cause Management did not have appropriate controls in place to review the recording of rental revenue for completeness and accuracy. Review procedures were not adequately followed to review subsequent invoices for relevance to the current fiscal period or to properly capitalize and classify disbursements as fixed assets. Effect Management did not properly record rental revenue, resulting in possible overstatement of rental revenue, rental assistance payments receivable, and due to related party. Furthermore, certain utility and contract expenses presented for the current fiscal year were not recorded until the next fiscal year, resulting in understated expenses. Finally, certain disbursements were not capitalized to fixed assets in accordance with the Organization's policy, and those disbursements that were capitalized were not classified consistent with accounting, industry and HUD standards. Recommendation Management should review and enhance its internal controls over rental revenue recording to ensure rental revenue is complete and accurate for the year as provided for in the HAP contract, receivables are properly recorded, and due to related party is accurate. Management should revisit and enhance its review procedures over subsequent expenditures to ensure expenses are captured in the correct fiscal period and to properly capitalize and classify disbursements as fixed assets. Identification of repeat finding The finding is a repeat of Finding No. 2020-008 reported in the audit for the year ended June 30, 2020. Auditor non-compliance code S - Internal control deficiencies Questioned costs $25,996 Finding resolution status In process
Controller now reviews monthly rent generation with HUD accountant. Boston Post vs Contracts and leases. TLC vs Contracts and lease. Vouchers to HUD and bill backs TLC are approved by Controller.
2020-008
Statement of condition Program Income In connection with the procedures applied to a sample of four tenant lease files, we noted the following instances of noncompliance with HUD regulations regarding tenant eligibility and the maintenance of lease files: ? For all of the tenant lease files selected, the Organization did not maintain the lead-based paint disclosure in their lease files. ? For three of the tenant lease files selected, the Organization did not maintain the required Violence Against Women Act provisions and notifications in the lease file. ? For one of the tenant lease files selected, the Organization did not maintain the background checks in the lease file. Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Cause Management?s policies with respect to the determination of tenant eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, were not consistently followed. Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This noncompliance could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Auditor noncompliance code Z - Other Questioned costs None Recommendation Management should review and enhance procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Identification of repeat finding The finding is a repeat of Finding No. 2020-001 reported in the audit for the year ended June 30, 2020. Finding resolution status In process
Show full finding ▾Hide full finding ▴Statement of condition Program Income In connection with the procedures applied to a sample of four tenant lease files, we noted the following instances of noncompliance with HUD regulations regarding tenant eligibility and the maintenance of lease files: ? For all of the tenant lease files selected, the Organization did not maintain the lead-based paint disclosure in their lease files. ? For three of the tenant lease files selected, the Organization did not maintain the required Violence Against Women Act provisions and notifications in the lease file. ? For one of the tenant lease files selected, the Organization did not maintain the background checks in the lease file. Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Cause Management?s policies with respect to the determination of tenant eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, were not consistently followed. Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This noncompliance could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Auditor noncompliance code Z - Other Questioned costs None Recommendation Management should review and enhance procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Identification of repeat finding The finding is a repeat of Finding No. 2020-001 reported in the audit for the year ended June 30, 2020. Finding resolution status In process
A manual overhaul of the Client/Tenant onboarding process has been completed. This was done to sync the Nursing Admission process to the HUD admission process. Items were being submitted to nursing via the QIDP department now has been included with HUD and synced to therap and reviewed quarterly, and after every new admission. A 3 Tier file System has been implemented. Efile Cloud, Locked Paper Copies "HUD TENANT FILES' stored on site.
2020-001
Statement of condition Program Income During the year ended June 30, 2021, management did not perform a verification of tenant assets as part of tenant certification and recertification procedures. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to verify tenant assets to ensure appropriate subsidy calculations. Cause The Organization's tenants are multi-handicapped blind low-income adults. The cash accounts held by the tenants are maintained by the Sponsor on behalf of the tenants and therefore other assets are not verified. Effect Subsidy receipts could be overstated. Recommendation Management should revisit and enhance its certification and annual recertification procedures to include a verification of tenant assets. Identification of repeat finding This finding is not a repeat finding. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Statement of condition Program Income During the year ended June 30, 2021, management did not perform a verification of tenant assets as part of tenant certification and recertification procedures. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to verify tenant assets to ensure appropriate subsidy calculations. Cause The Organization's tenants are multi-handicapped blind low-income adults. The cash accounts held by the tenants are maintained by the Sponsor on behalf of the tenants and therefore other assets are not verified. Effect Subsidy receipts could be overstated. Recommendation Management should revisit and enhance its certification and annual recertification procedures to include a verification of tenant assets. Identification of repeat finding This finding is not a repeat finding. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Yearly Asset verification through MRI are being scheduled. EIV submissions were monthly additional assets are not normally added to clients name or list of assets after admission. Yearly verification of all existing clients occur now 90 days prior to Contract renewal.
Statement of condition Activities allowed or unallowed During the year ended June 30, 2021, management did not maintain a log of work orders processed. Criteria HUD projects are required to maintain a log of work orders processed. Cause The Organization did not have a system in place to summarize and collect work orders for the fiscal year. Effect Significant repairs could be delayed and repairs could be falsified or duplicated. Recommendation Management should revisit and enhance its procedures over work orders to ensure a log is maintained. Identification of repeat finding This finding is not a repeat finding. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Show full finding ▾Hide full finding ▴Statement of condition Activities allowed or unallowed During the year ended June 30, 2021, management did not maintain a log of work orders processed. Criteria HUD projects are required to maintain a log of work orders processed. Cause The Organization did not have a system in place to summarize and collect work orders for the fiscal year. Effect Significant repairs could be delayed and repairs could be falsified or duplicated. Recommendation Management should revisit and enhance its procedures over work orders to ensure a log is maintained. Identification of repeat finding This finding is not a repeat finding. Auditor non-compliance code S - Internal control deficiencies Questioned costs None Finding resolution status In process
Facilities Assistant role has been tasked with reviewing and posting quarterly Upkeep Analytics to the HUD Files. UpKeep Analytics is the reporting mechanism for the TLC work orders and supplies used during.
FAC accepted this audit on October 19, 2021 — management decision was due April 19, 2022.
Statement of condition In connection with the procedures applied to a sample of four tenant lease files, we noted the following instances of noncompliance with HUD regulations regarding tenant eligibility and the maintenance of lease files: ? For all of the tenant lease files selected, the Project did not maintain the tenant applications in their lease files. ? For three of the tenant lease files selected, the Project did not maintain the signed lease agreement in their lease files. ? For all of the tenant lease files selected, the Project did not maintain the lead-based paint disclosure in their lease files. ? For all of the tenant lease files selected, the Project did not have confirmed citizen status in their lease files. ? For all of the tenant lease files selected, the Project did not maintain the background checks in their lease file. ? For all of the tenant lease files selected, the Project did not maintain executed or dated HUD 9887-A Forms in their lease files. ? For two of the tenant lease files selected, the Project did not retain documentation of the income verification portion of the annual recertification in the tenant lease file. ? For all of the tenant lease files selected, the Project did not maintain executed HUD 50059 Forms in their lease files. Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Cause Management?s policies with respect to the determination of tenant eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, were not consistently followed. Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This noncompliance could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Auditor noncompliance code: Z - Other Questioned costs $29,340 Recommendation Management should review and enhance procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Identification as a repeat finding The finding is a repeat of Finding No. 2019-002 reported in the audit for the year ended June 30, 2019. Finding resolution status In Process
Show full finding ▾Hide full finding ▴Statement of condition In connection with the procedures applied to a sample of four tenant lease files, we noted the following instances of noncompliance with HUD regulations regarding tenant eligibility and the maintenance of lease files: ? For all of the tenant lease files selected, the Project did not maintain the tenant applications in their lease files. ? For three of the tenant lease files selected, the Project did not maintain the signed lease agreement in their lease files. ? For all of the tenant lease files selected, the Project did not maintain the lead-based paint disclosure in their lease files. ? For all of the tenant lease files selected, the Project did not have confirmed citizen status in their lease files. ? For all of the tenant lease files selected, the Project did not maintain the background checks in their lease file. ? For all of the tenant lease files selected, the Project did not maintain executed or dated HUD 9887-A Forms in their lease files. ? For two of the tenant lease files selected, the Project did not retain documentation of the income verification portion of the annual recertification in the tenant lease file. ? For all of the tenant lease files selected, the Project did not maintain executed HUD 50059 Forms in their lease files. Criteria Tenant lease files are required to be maintained and tenant eligibility determined in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Cause Management?s policies with respect to the determination of tenant eligibility and the maintenance of tenant lease files in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, were not consistently followed. Effect The procedures for determining tenant eligibility and maintaining tenant lease files were not consistently applied in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. This noncompliance could result in units being rented to ineligible tenants or errors in the rent subsidies paid by HUD. Auditor noncompliance code: Z - Other Questioned costs $29,340 Recommendation Management should review and enhance procedures and monitor compliance with those procedures to ensure that tenant eligibility is correctly determined and that tenant lease files are properly maintained in accordance with the requirements of HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Identification as a repeat finding The finding is a repeat of Finding No. 2019-002 reported in the audit for the year ended June 30, 2019. Finding resolution status In Process
TLC tenant files are currently undergoing a full procedural overhaul. Tenant files are currently being converted to electronic documents and being stored electronically in TLC's cloud server ?Efile Cabinet?. A tenant move-in checklist has been developed and implemented by the finance, QIDP, and nursing staff. This will validate that all necessary parties receive and maintain the following information: 1. Eligibility 2. Interview confirmation 3. Ratified Leases 4. Medical Requirements 5. Trust account / personal funds balance 6. Personal belongings 7. Family / Conservator Contact Info 8. Background Info 9. Confirmation by each department for validation 10. Documentation to security deposit log. (Upon entrance and exit, with substantiation of payment / cash receipt) This procurement will be completed for each active and potential future resident.
2019-002
Statement of condition Eligibility During the year ended June 30, 2020, the Project did not maintain its rent rolls with the updated information of tenants who moved in, moved out, current rental assistance amounts, and tenant rent portions of the gross potential rent. Criteria Projects should maintain updated rent rolls for accurate reporting of income. Cause Procedures were not in place to ensure the rent rolls were updated with accurate tenant information. Effect The income recorded was not properly classified between rental assistance and tenant rental income, and vacancies were not properly recorded due to the improper rent roll maintenance. Auditor noncompliance code S - Internal control deficiencies Questioned costs None Recommendation We recommend management implement procedures to review the monthly rent rolls to ensure the information listed is accurate and complete. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status In Process
Show full finding ▾Hide full finding ▴Statement of condition Eligibility During the year ended June 30, 2020, the Project did not maintain its rent rolls with the updated information of tenants who moved in, moved out, current rental assistance amounts, and tenant rent portions of the gross potential rent. Criteria Projects should maintain updated rent rolls for accurate reporting of income. Cause Procedures were not in place to ensure the rent rolls were updated with accurate tenant information. Effect The income recorded was not properly classified between rental assistance and tenant rental income, and vacancies were not properly recorded due to the improper rent roll maintenance. Auditor noncompliance code S - Internal control deficiencies Questioned costs None Recommendation We recommend management implement procedures to review the monthly rent rolls to ensure the information listed is accurate and complete. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status In Process
Rental Revenue will be classified by tenant into 3 accounts. Each tenant admitted to the home will have rental costs billed to the following account categories: 1. Rent ? HUD subsidy 2. Rent ? TLC Subsidy 3. Rent ? Billed to Tenant
Statement of condition Allowable costs Activities allowed or unallowed Due to a lack of review and appropriate processes, interest expense on the Community Development Block Grant (the residual receipts note payable) was not properly recorded for the years ended June 30, 1991 through June 30, 2019. The understated interest expense resulted in a prior period adjustment recorded during the year ended June 30, 2020 to restate opening net deficit without donor restrictions by an additional $131,585 and increase the Community Development Block Grant debt balance by a corresponding $131,585. This prior period adjustment resulted in management incorrectly preparing the schedule of expenditures of federal awards (the "SEFA") for the year ended June 30, 2020. Criteria The Project is required to have controls and procedures in place in order to accurately account for its liabilities and expenses. Cause Management did not have appropriate controls in place to properly account for the Project's debt and related interest expense in accordance with the underlying debt agreement. Effect Insufficient controls in accounting for the Project's obligations could result in further accounting errors and understated liabilities. Auditor noncompliance code S - Internal control deficiencies Questioned costs $131,585 Recommendation We recommend management reconsider its organizational structure to ensure an appropriate member of management is in place to review the accounting records to ensure obligations are properly accounted for in connection with the Project's underlying debt agreements. Further, we recommend management establish a set of controls and procedures for reviewing debt agreements as part of the year-end close process to ensure expenses of the Project are properly stated. Management should also establish procedures surrounding the preparation and review of the SEFA to ensure the presentation of complete and accurate information. Identification as a repeat finding This finding is not a repeat finding Finding resolution status In Process
Show full finding ▾Hide full finding ▴Statement of condition Allowable costs Activities allowed or unallowed Due to a lack of review and appropriate processes, interest expense on the Community Development Block Grant (the residual receipts note payable) was not properly recorded for the years ended June 30, 1991 through June 30, 2019. The understated interest expense resulted in a prior period adjustment recorded during the year ended June 30, 2020 to restate opening net deficit without donor restrictions by an additional $131,585 and increase the Community Development Block Grant debt balance by a corresponding $131,585. This prior period adjustment resulted in management incorrectly preparing the schedule of expenditures of federal awards (the "SEFA") for the year ended June 30, 2020. Criteria The Project is required to have controls and procedures in place in order to accurately account for its liabilities and expenses. Cause Management did not have appropriate controls in place to properly account for the Project's debt and related interest expense in accordance with the underlying debt agreement. Effect Insufficient controls in accounting for the Project's obligations could result in further accounting errors and understated liabilities. Auditor noncompliance code S - Internal control deficiencies Questioned costs $131,585 Recommendation We recommend management reconsider its organizational structure to ensure an appropriate member of management is in place to review the accounting records to ensure obligations are properly accounted for in connection with the Project's underlying debt agreements. Further, we recommend management establish a set of controls and procedures for reviewing debt agreements as part of the year-end close process to ensure expenses of the Project are properly stated. Management should also establish procedures surrounding the preparation and review of the SEFA to ensure the presentation of complete and accurate information. Identification as a repeat finding This finding is not a repeat finding Finding resolution status In Process
1. All notes payable and coinciding interest expenses will be set to an external amortization schedule based on the ratified agreement. The amortization will be set as recurring entries based on the dates and amounts set in the amortization schedule. A quarterly review will occur for the debt covenants that do not come with a monthly statement. 2. Any adjustment to retained earnings will be documented with proper substantiation with notations explaining reason for adjustment.
Statement of condition Special tests and provisions As of June 30, 2020, management had not updated the security deposit listing with the current tenants' information, including tenants who had moved out, moved in, or changes in the security deposit requirements. Criteria In order to maintain compliance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, the Project must utilize and refer to its security deposit records. Cause The Project failed to maintain security deposit records required by HUD. Effect Management did not properly maintain the security deposit records of the Project, resulting in possible unidentified noncompliance, inaccurate reporting, or other exceptions to the HUD regulatory provisions. Auditor noncompliance code S - Internal control deficiencies Questioned costs None Recommendation Management should strengthen its internal control review function over security deposits to prevent future oversights and to ensure the security deposit listing is properly maintained. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status Not Started
Show full finding ▾Hide full finding ▴Statement of condition Special tests and provisions As of June 30, 2020, management had not updated the security deposit listing with the current tenants' information, including tenants who had moved out, moved in, or changes in the security deposit requirements. Criteria In order to maintain compliance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, the Project must utilize and refer to its security deposit records. Cause The Project failed to maintain security deposit records required by HUD. Effect Management did not properly maintain the security deposit records of the Project, resulting in possible unidentified noncompliance, inaccurate reporting, or other exceptions to the HUD regulatory provisions. Auditor noncompliance code S - Internal control deficiencies Questioned costs None Recommendation Management should strengthen its internal control review function over security deposits to prevent future oversights and to ensure the security deposit listing is properly maintained. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status Not Started
From move-in and move-out check lists referenced in response to Finding No. 2020-001, security deposits will be entered and reconciled every period.
Statement of condition Allowable costs Activities allowed or unallowed Special tests and provisions During the year ended June 30, 2020, the Project did not maintain its permanent records, including but not limited to: the original Project Rental Assistance Contract, promissory note and loan agreement supporting the HUD mortgage note, the Project's Affirmative Fair Market Housing Plan, and the Sponsor's Management Agent Certification. Criteria In order to maintain compliance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, the Project must utilize and refer to its permanent records. Cause The Project failed to maintain permanent document records required by HUD. Effect Management did not properly maintain the permanent records of the Project, resulting in possible unidentified noncompliance, inaccurate reporting, or other exceptions to the HUD regulatory provisions. Auditor noncompliance code S - Internal control deficiencies Questioned costs None Recommendation Management should implement a record-storing function of its internal controls to prevent future lost documentation, and a review of that function to ensure the storage is properly maintained. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status Not Started
Show full finding ▾Hide full finding ▴Statement of condition Allowable costs Activities allowed or unallowed Special tests and provisions During the year ended June 30, 2020, the Project did not maintain its permanent records, including but not limited to: the original Project Rental Assistance Contract, promissory note and loan agreement supporting the HUD mortgage note, the Project's Affirmative Fair Market Housing Plan, and the Sponsor's Management Agent Certification. Criteria In order to maintain compliance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, the Project must utilize and refer to its permanent records. Cause The Project failed to maintain permanent document records required by HUD. Effect Management did not properly maintain the permanent records of the Project, resulting in possible unidentified noncompliance, inaccurate reporting, or other exceptions to the HUD regulatory provisions. Auditor noncompliance code S - Internal control deficiencies Questioned costs None Recommendation Management should implement a record-storing function of its internal controls to prevent future lost documentation, and a review of that function to ensure the storage is properly maintained. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status Not Started
Digital and paper records will be maintained by internal procurement and archived based on recency. Soft copy records will be stored on company cloud storage Efile as noted in response to Finding No. 2020-001.
Statement of condition Allowable costs Activities allowed or unallowed Management has not reviewed its allocated costs calculations for accuracy and completeness of insurance and payroll costs incurred by the Project. Criteria The Project is required to have controls and procedures in place in order to accurately record costs incurred by the Project. Cause Management did not have appropriate controls in place to review the allocation percentages for completeness and accuracy. Effect Out-of-date allocations could result in understated or overstated expenses and liabilities of the Project, as well as theft. Auditor noncompliance code S - Internal control deficiencies Questioned costs None Recommendation Management should review and enhance its internal controls over payroll and insurance allocations to ensure the costs recorded by the Project are representative of its share of the charges. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status In Process
Show full finding ▾Hide full finding ▴Statement of condition Allowable costs Activities allowed or unallowed Management has not reviewed its allocated costs calculations for accuracy and completeness of insurance and payroll costs incurred by the Project. Criteria The Project is required to have controls and procedures in place in order to accurately record costs incurred by the Project. Cause Management did not have appropriate controls in place to review the allocation percentages for completeness and accuracy. Effect Out-of-date allocations could result in understated or overstated expenses and liabilities of the Project, as well as theft. Auditor noncompliance code S - Internal control deficiencies Questioned costs None Recommendation Management should review and enhance its internal controls over payroll and insurance allocations to ensure the costs recorded by the Project are representative of its share of the charges. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status In Process
As notated in response to Finding No. 2020-003, allocation charges for insurance, labor, indirect costs, etc. have been calculated based off square footage cited from property tax assessments. These will be reviewed in each closing schedule.
Statement of condition Allowable costs Activities allowed or unallowed During the year ended June 30, 2020, the Project paid expenses in the amount of $1,058 without obtaining a contract, bill, invoice, or other vendor-produced support. Additionally, management did not properly cut off disbursements at the prior fiscal year end, resulting in expenses being recorded incorrectly within the current audit period. Criteria Project funds disbursed must be supported by accurate and approved invoices, bills, or other supporting documentation. Furthermore, management must review invoices after fiscal year end to ensure all expenses related to the fiscal period are being accurately captured. Cause Procedures were not in place to ensure disbursements are only issued when accurate, approved third-party support is provided. Review procedures were not adequately followed to review subsequent invoices for relevance to the fiscal period. Effect The payment of $1,058 is unsupported by third-party documentation, resulting in a potential portion of the disbursement not being eligible and/or being deemed a reasonable operational expense of the Project. Furthermore, certain utility and contract expenses presented for fiscal year 2020 were for the prior audit period and/or were understated for the current audit period. Auditor noncompliance code S - Internal control deficiencies Questioned costs None Recommendation We recommend management implement a requirement that no disbursements be made without accurate, approved third-party invoices for amounts above a certain threshold, and without an approved estimate or executed contract for large or nonroutine projects. Management should establish an expectation of which expenses are typically received after a fiscal period closes and perform a secondary review of those invoices to ensure the expenses are captured in the correct fiscal period. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status In Process
Show full finding ▾Hide full finding ▴Statement of condition Allowable costs Activities allowed or unallowed During the year ended June 30, 2020, the Project paid expenses in the amount of $1,058 without obtaining a contract, bill, invoice, or other vendor-produced support. Additionally, management did not properly cut off disbursements at the prior fiscal year end, resulting in expenses being recorded incorrectly within the current audit period. Criteria Project funds disbursed must be supported by accurate and approved invoices, bills, or other supporting documentation. Furthermore, management must review invoices after fiscal year end to ensure all expenses related to the fiscal period are being accurately captured. Cause Procedures were not in place to ensure disbursements are only issued when accurate, approved third-party support is provided. Review procedures were not adequately followed to review subsequent invoices for relevance to the fiscal period. Effect The payment of $1,058 is unsupported by third-party documentation, resulting in a potential portion of the disbursement not being eligible and/or being deemed a reasonable operational expense of the Project. Furthermore, certain utility and contract expenses presented for fiscal year 2020 were for the prior audit period and/or were understated for the current audit period. Auditor noncompliance code S - Internal control deficiencies Questioned costs None Recommendation We recommend management implement a requirement that no disbursements be made without accurate, approved third-party invoices for amounts above a certain threshold, and without an approved estimate or executed contract for large or nonroutine projects. Management should establish an expectation of which expenses are typically received after a fiscal period closes and perform a secondary review of those invoices to ensure the expenses are captured in the correct fiscal period. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status In Process
As outlined in response to Finding No. 2020-003 above, each period will have a close to accounts payable. All expenses that are not present at actual will be accrued within U.S. GAAP standards. All accounts payable substantiation is now reviewed by signed.
Statement of condition Special tests and provisions During the year ended June 30, 2020, management did not segregate the tenant security deposit cash into a restricted cash account. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to establish and maintain at all times fully funded, separate bank accounts in the name of the entity for tenant security deposits collected. Cause The Project?s security deposits were deposited into the replacement reserve or operating cash accounts and were not transferred into a segregated account as of June 30, 2020. Effect Management commingled tenant security deposits with its replacement reserve account and operating cash account, resulting in the potential use of tenant security deposit cash to fund repairs or replacements without obtaining the required prior approval of HUD. Auditor Noncompliance Code D ? Commingling of funds Questioned costs None Recommendation Management should review and implement policies, procedures, and internal controls to ensure that security deposit cash is segregated into a cash account. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status Completed
Show full finding ▾Hide full finding ▴Statement of condition Special tests and provisions During the year ended June 30, 2020, management did not segregate the tenant security deposit cash into a restricted cash account. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to establish and maintain at all times fully funded, separate bank accounts in the name of the entity for tenant security deposits collected. Cause The Project?s security deposits were deposited into the replacement reserve or operating cash accounts and were not transferred into a segregated account as of June 30, 2020. Effect Management commingled tenant security deposits with its replacement reserve account and operating cash account, resulting in the potential use of tenant security deposit cash to fund repairs or replacements without obtaining the required prior approval of HUD. Auditor Noncompliance Code D ? Commingling of funds Questioned costs None Recommendation Management should review and implement policies, procedures, and internal controls to ensure that security deposit cash is segregated into a cash account. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status Completed
On July 27, 2020, management transferred the tenant security deposit cash of $2,364 into a separate bank account. From move-in and move-out check lists referenced in response to Finding No. 2020- 001, security deposits will be entered and reconciled every period.
Statement of condition During the year ended June 30, 2020, management did not make the required deposits of $2,268 into the replacement reserve. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to make monthly deposits into a reserve for replacements in an amount established by HUD. Cause The Project did not have procedures in place to ensure the monthly HUD deposits are made as required. Effect Management underfunded the replacement reserve deposit for the year ended June 30, 2020. Auditor noncompliance code S - Internal control deficiencies Questioned costs None Recommendation Management should transfer $2,268 into the replacement reserve account. Management should also establish review procedures to ensure the required monthly deposit is being made in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Identification as a repeat finding This finding is a repeat of Finding 2019-001 reported in the audit for the year ended June 30, 2019. Finding resolution status In Process
Show full finding ▾Hide full finding ▴Statement of condition During the year ended June 30, 2020, management did not make the required deposits of $2,268 into the replacement reserve. Criteria In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs, HUD projects are required to make monthly deposits into a reserve for replacements in an amount established by HUD. Cause The Project did not have procedures in place to ensure the monthly HUD deposits are made as required. Effect Management underfunded the replacement reserve deposit for the year ended June 30, 2020. Auditor noncompliance code S - Internal control deficiencies Questioned costs None Recommendation Management should transfer $2,268 into the replacement reserve account. Management should also establish review procedures to ensure the required monthly deposit is being made in accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs. Identification as a repeat finding This finding is a repeat of Finding 2019-001 reported in the audit for the year ended June 30, 2019. Finding resolution status In Process
With our new banking partner American Business Bank and new banking arrangements (rules), the reserve accounts are now auto funded based off of the contractual obligations every month on the 28th of the month unless a HUD approved letter is validated to halt the transfers.
2019-001
Statement of condition Activities allowed or unallowed For one out of eight work orders reviewed, the work order request was not addressed timely and/or properly documented during the year ended June 30, 2020. Criteria Management must have a process in place to monitor and review work orders to ensure all necessary repairs and maintenance are being performed timely and satisfactorily. Cause Monitoring procedures were not adequately followed to ensure work orders were timely addressed and documented. Effect Certain repairs and required maintenance were not performed timely for the current audit period, resulting in potential disrepair and substandard residential quality of the Project. Auditor noncompliance code S - Internal control deficiencies Questioned costs None Recommendation Management should review and enhance its work order policies and monitoring procedures to ensure all work orders, repairs, and maintenance of the Project are addressed timely and properly documented. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status In Process
Show full finding ▾Hide full finding ▴Statement of condition Activities allowed or unallowed For one out of eight work orders reviewed, the work order request was not addressed timely and/or properly documented during the year ended June 30, 2020. Criteria Management must have a process in place to monitor and review work orders to ensure all necessary repairs and maintenance are being performed timely and satisfactorily. Cause Monitoring procedures were not adequately followed to ensure work orders were timely addressed and documented. Effect Certain repairs and required maintenance were not performed timely for the current audit period, resulting in potential disrepair and substandard residential quality of the Project. Auditor noncompliance code S - Internal control deficiencies Questioned costs None Recommendation Management should review and enhance its work order policies and monitoring procedures to ensure all work orders, repairs, and maintenance of the Project are addressed timely and properly documented. Identification as a repeat finding This finding is not a repeat finding. Finding resolution status In Process
The work order system has been deficient due to improper initiation and documentation by the requestors. Fulfillment and reimbursement processes have been corrected to the following. ? Direct care staff leads (HSCs) are to file requests for specific repairs (not capital building improvements) to facilities manager in through our new system called UpKeep. ? Internal repairs are assigned by the facilities manager and completed immediately based off maintenance staff availability. ? Large scale repairs that include outside assistance/consult are priced by Facilities Manager and scheduled. Updates to scheduling are added to UpKeep ticketing system. ? After receipt of invoice/quote from outside vendor, a request for transfer from reserve account is filled. ? All completed requests are closed out by maintenance staff. Those that require additional attention will be annotated and updated as events occur.
FAC accepted this audit on April 14, 2019 — management decision was due October 14, 2019.
GSA_MIGRATION
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GSA_MIGRATION
2016-001
GSA_MIGRATION
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GSA_MIGRATION
GSA_MIGRATION
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GSA_MIGRATION
2016-002
GSA_MIGRATION
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GSA_MIGRATION
2016-003
FAC accepted this audit on September 24, 2017 — management decision was due March 24, 2018.
GSA_MIGRATION
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GSA_MIGRATION
GSA_MIGRATION
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